In This Article:
These are the people who want to drive you happy.
In 2022, online used car retailer Carvana (CVNA) made its Super Bowl debut with a 30-second commercial with the slogan "We'll Drive You Happy."
💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💵
The Los Angeles Rams went on to beat the Cincinnati Bengals 23-20, while the Tempe, Ariz., company known for its car-vending machines was sacked by New Constructs, which labeled Carvana a “zombie company."
The equity-research firm said Carvana had “failed to generate positive free cash flow in any year since going public in 2017.”
Carvana laid off 12% of its staff in May 2022 after falling short of growth expectations and its shares sank 90%.
Related: Veteran trader takes hard look at Tesla stock price amid slump, controversy
Then the company kicked off a much-heralded turnaround and Co-Founder and Chief Executive Ernie Garcia told analysts that "we were stubborn and ambitious."
In January, however, short-selling firm Hindenburg Research issued a report that declared Carvana's rebound "a mirage."
Carvana CEO: Journey just beginning
The firm said its research uncovered $800 million of loan sales to a "suspected undisclosed related party, along with details on how accounting manipulation and lax underwriting have fueled temporary reported income growth – all while insiders cash out billions in stock."
Hindenburg, which closed its doors a short time later, said Carvana was exorbitantly valued and its business faced major headwinds as used car prices declined.
More Automotive:
-
Tesla's Elon Musk offers Americans cheaper cars, robot friends
-
Veteran trader takes hard look at Tesla stock price amid slump, controversy
-
Tesla orders massive Cybertruck recall due to dangerous discovery
Carvana said the Hindenburg report's arguments were "intentionally misleading and inaccurate and have already been made numerous times by other short-sellers seeking to benefit from a decline in our stock price."
In February, Carvana beat Wall Street's fourth-quarter-earnings expectations.
Garcia said that in 2024 Carvana became the most profitable public automotive retailer in U.S. history measured by adjusted Ebitda margin while also resuming industry-leading growth.
"This unique combination is the product of more than $10 billion, 10 years, and tens of millions of hours of hard work invested to develop a truly differentiated business model that delivers both better customer experiences and better results," he said.